Summary
A proposal to:
- Increase eBTC’s supply cap on the Ethereum Core instance.
- Increase WBTC’s supply cap on the Ethereum Core instance.
- Increase USDC’s supply and borrow caps on the BNB instance.
All increases are backed by Chaos Labs’ risk simulations, which consider user behavior, on-chain liquidity, and price impact, ensuring that higher caps do not introduce additional risk to the platform.
eBTC (Ethereum Core)
eBTC’s supply cap utilization has reached 84%.
Supply Distribution
eBTC’s supply distribution is somewhat concentrated, with the top supplier accounting for 24% of the total. However, this user is borrowing cbBTC, which is highly correlated with eBTC, significantly reducing the risk of liquidation.
The remaining top suppliers either maintain high health scores or are borrowing correlated assets, which significantly reduces liquidation risk.
The largest borrowed assets against eBTC are WBTC and cbBTC, which together account for 62% of the total borrowed asset distribution.
Liquidity
eBTC’s liquidity has remained stable over the past three months, with a current 70 eBTC sale incurring less than 3% price slippage.
Recommendation
Given user behavior and on-chain liquidity, we recommend increasing eBTC’s supply cap.
WBTC (Ethereum Core)
WBTC’s supply cap utilization has reached 89%, while its borrow cap utilization remains at 14%.
Supply Distribution
WBTC’s supply is well-distributed, with the top supplier accounting for only 4% of the total. All top suppliers maintain relatively high health scores (>1.3), indicating limited liquidation risk.
The top borrowed assets against WBTC are USDT and USDC, two of the most liquid assets in the market. Together, they account for 90% of the total borrowed distribution.
Liquidity
WBTC’s liquidity has remained generally stable over the past three months. Currently, a sell of 400 WBTC to USDT would incur less than 3% price slippage.
Recommendation
Given user behavior and on-chain liquidity, we recommend increasing WBTC’s supply cap.
USDC (BNB)
USDC’s supply cap utilization has reached 84%, while its borrow cap utilization stands at 95%.
Supply Distribution
USDC’s distribution is somewhat concentrated, with the top supplier accounting for approximately 25% of the total. However, as this supplier has no active borrowing activity, it does not pose any immediate liquidation risk.
The remaining top suppliers present limited liquidation risk, as most have no active borrowing activity, while others maintain relatively high health scores (>2)—both factors that significantly reduce overall risk.
Recommendation
Given safe user behavior, we recommend increasing USDC’s supply and borrow caps.
Specification
| Instance | Asset | Current Supply Cap | Recommended Supply Cap | Current Borrow Cap | Recommended Borrow Cap |
|---|---|---|---|---|---|
| Ethereum Core | eBTC | 1,500 | 1,800 | - | - |
| Ethereum Core | WBTC | 47,500 | 49,875 | 28,000 | - |
| BNB | USDC | 30,000,000 | 60,000,000 | 20,000,000 | 40,000,000 |
Next Steps
We will move forward and implement these updates via the Risk Steward process.
Disclaimer
Chaos Labs has not been compensated by any third party for publishing this ARFC.
Copyright
Copyright and related rights waived via CC0